Can a tow truck driver hit the car he is repossessing and cause damage?

Yes, he can cause damage, but then he has to pay for it. In the majority of cases if the vehicle property is damaged the lender is responsible. not the repo agent. Repossessing agents in the majority of states are required to have a "hold harmless" agreement signed by the lender/lien holder. This releases the repo. agent from being responsible for any damages incurred to the vehicle or other property.